|
U.S. Code as of:
01/19/04
Section 78n. Proxies
(a) Solicitation of proxies in violation of rules and regulations
It shall be unlawful for any person, by the use of the mails or
by any means or instrumentality of interstate commerce or of any
facility of a national securities exchange or otherwise, in
contravention of such rules and regulations as the Commission may
prescribe as necessary or appropriate in the public interest or for
the protection of investors, to solicit or to permit the use of his
name to solicit any proxy or consent or authorization in respect of
any security (other than an exempted security) registered pursuant
to section 78l of this title.
(b) Giving or refraining from giving proxy in respect of any
security carried for account of customer
(1) It shall be unlawful for any member of a national securities
exchange, or any broker or dealer registered under this chapter, or
any bank, association, or other entity that exercises fiduciary
powers, in contravention of such rules and regulations as the
Commission may prescribe as necessary or appropriate in the public
interest or for the protection of investors, to give, or to refrain
from giving a proxy, consent, authorization, or information
statement in respect of any security registered pursuant to section
78l of this title, or any security issued by an investment company
registered under the Investment Company Act of 1940 [15 U.S.C.
80a-1 et seq.], and carried for the account of a customer.
(2) With respect to banks, the rules and regulations prescribed
by the Commission under paragraph (1) shall not require the
disclosure of the names of beneficial owners of securities in an
account held by the bank on December 28, 1985, unless the
beneficial owner consents to the disclosure. The provisions of this
paragraph shall not apply in the case of a bank which the
Commission finds has not made a good faith effort to obtain such
consent from such beneficial owners.
(c) Information to holders of record prior to annual or other
meeting
Unless proxies, consents, or authorizations in respect of a
security registered pursuant to section 78l of this title, or a
security issued by an investment company registered under the
Investment Company Act of 1940 [15 U.S.C. 80a-1 et seq.], are
solicited by or on behalf of the management of the issuer from the
holders of record of such security in accordance with the rules and
regulations prescribed under subsection (a) of this section, prior
to any annual or other meeting of the holders of such security,
such issuer shall, in accordance with rules and regulations
prescribed by the Commission, file with the Commission and transmit
to all holders of record of such security information substantially
equivalent to the information which would be required to be
transmitted if a solicitation were made, but no information shall
be required to be filed or transmitted pursuant to this subsection
before July 1, 1964.
(d) Tender offer by owner of more than five per centum of class of
securities; exceptions
(1) It shall be unlawful for any person, directly or indirectly,
by use of the mails or by any means or instrumentality of
interstate commerce or of any facility of a national securities
exchange or otherwise, to make a tender offer for, or a request or
invitation for tenders of, any class of any equity security which
is registered pursuant to section 78l of this title, or any equity
security of an insurance company which would have been required to
be so registered except for the exemption contained in section
78l(g)(2)(G) of this title, or any equity security issued by a a
closed-end investment company registered under the Investment
Company Act of 1940 [15 U.S.C. 80a-1 et seq.], if, after
consummation thereof, such person would, directly or indirectly, be
the beneficial owner of more than 5 per centum of such class,
unless at the time copies of the offer or request or invitation are
first published or sent or given to security holders such person
has filed with the Commission a statement containing such of the
information specified in section 78m(d) of this title, and such
additional information as the Commission may by rules and
regulations prescribe as necessary or appropriate in the public
interest or for the protection of investors. All requests or
invitations for tenders or advertisements making a tender offer or
requesting or inviting tenders of such a security shall be filed as
a part of such statement and shall contain such of the information
contained in such statement as the Commission may by rules and
regulations prescribe. Copies of any additional material soliciting
or requesting such tender offers subsequent to the initial
solicitation or request shall contain such information as the
Commission may by rules and regulations prescribe as necessary or
appropriate in the public interest or for the protection of
investors, and shall be filed with the Commission not later than
the time copies of such material are first published or sent or
given to security holders. Copies of all statements, in the form in
which such material is furnished to security holders and the
Commission, shall be sent to the issuer not later than the date
such material is first published or sent or given to any security
holders.
(2) When two or more persons act as a partnership, limited
partnership, syndicate, or other group for the purpose of
acquiring, holding, or disposing of securities of an issuer, such
syndicate or group shall be deemed a "person" for purposes of this
subsection.
(3) In determining, for purposes of this subsection, any
percentage of a class of any security, such class shall be deemed
to consist of the amount of the outstanding securities of such
class, exclusive of any securities of such class held by or for the
account of the issuer or a subsidiary of the issuer.
(4) Any solicitation or recommendation to the holders of such a
security to accept or reject a tender offer or request or
invitation for tenders shall be made in accordance with such rules
and regulations as the Commission may prescribe as necessary or
appropriate in the public interest or for the protection of
investors.
(5) Securities deposited pursuant to a tender offer or request or
invitation for tenders may be withdrawn by or on behalf of the
depositor at any time until the expiration of seven days after the
time definitive copies of the offer or request or invitation are
first published or sent or given to security holders, and at any
time after sixty days from the date of the original tender offer or
request or invitation, except as the Commission may otherwise
prescribe by rules, regulations, or order as necessary or
appropriate in the public interest or for the protection of
investors.
(6) Where any person makes a tender offer, or request or
invitation for tenders, for less than all the outstanding equity
securities of a class, and where a greater number of securities is
deposited pursuant thereto within ten days after copies of the
offer or request or invitation are first published or sent or given
to security holders than such person is bound or willing to take up
and pay for, the securities taken up shall be taken up as nearly as
may be pro rata, disregarding fractions, according to the number of
securities deposited by each depositor. The provisions of this
subsection shall also apply to securities deposited within ten days
after notice of an increase in the consideration offered to
security holders, as described in paragraph (7), is first published
or sent or given to security holders.
(7) Where any person varies the terms of a tender offer or
request or invitation for tenders before the expiration thereof by
increasing the consideration offered to holders of such securities,
such person shall pay the increased consideration to each security
holder whose securities are taken up and paid for pursuant to the
tender offer or request or invitation for tenders whether or not
such securities have been taken up by such person before the
variation of the tender offer or request or invitation.
(8) The provisions of this subsection shall not apply to any
offer for, or request or invitation for tenders of, any security -
(A) if the acquisition of such security, together with all
other acquisitions by the same person of securities of the same
class during the preceding twelve months, would not exceed 2 per
centum of that class;
(B) by the issuer of such security; or
(C) which the Commission, by rules or regulations or by order,
shall exempt from the provisions of this subsection as not
entered into for the purpose of, and not having the effect of,
changing or influencing the control of the issuer or otherwise as
not comprehended within the purposes of this subsection.
(e) Untrue statement of material fact or omission of fact with
respect to tender offer
It shall be unlawful for any person to make any untrue statement
of a material fact or omit to state any material fact necessary in
order to make the statements made, in the light of the
circumstances under which they are made, not misleading, or to
engage in any fraudulent, deceptive, or manipulative acts or
practices, in connection with any tender offer or request or
invitation for tenders, or any solicitation of security holders in
opposition to or in favor of any such offer, request, or
invitation. The Commission shall, for the purposes of this
subsection, by rules and regulations define, and prescribe means
reasonably designed to prevent, such acts and practices as are
fraudulent, deceptive, or manipulative.
(f) Election or designation of majority of directors of issuer by
owner of more than five per centum of class of securities at
other than meeting of security holders
If, pursuant to any arrangement or understanding with the person
or persons acquiring securities in a transaction subject to
subsection (d) of this section or subsection (d) of section 78m of
this title, any persons are to be elected or designated as
directors of the issuer, otherwise than at a meeting of security
holders, and the persons so elected or designated will constitute a
majority of the directors of the issuer, then, prior to the time
any such person takes office as a director, and in accordance with
rules and regulations prescribed by the Commission, the issuer
shall file with the Commission, and transmit to all holders of
record of securities of the issuer who would be entitled to vote at
a meeting for election of directors, information substantially
equivalent to the information which would be required by subsection
(a) or (c) of this section to be transmitted if such person or
persons were nominees for election as directors at a meeting of
such security holders.
(g) Filing fees
(1)(A) At the time of filing such preliminary proxy solicitation
material as the Commission may require by rule pursuant to
subsection (a) of this section that concerns an acquisition,
merger, consolidation, or proposed sale or other disposition of
substantially all the assets of a company, the person making such
filing, other than a company registered under the Investment
Company Act of 1940 [15 U.S.C. 80a-1 et seq.], shall pay to the
Commission the following fees:
(i) for preliminary proxy solicitation material involving an
acquisition, merger, or consolidation, if there is a proposed
payment of cash or transfer of securities or property to
shareholders, a fee at a rate that, subject to paragraphs (5) and
(6), is equal to $92 per $1,000,000 of such proposed payment, or
of the value of such securities or other property proposed to be
transferred; and
(ii) for preliminary proxy solicitation material involving a
proposed sale or other disposition of substantially all of the
assets of a company, a fee at a rate that, subject to paragraphs
(5) and (6), is equal to $92 per $1,000,000 of the cash or of the
value of any securities or other property proposed to be received
upon such sale or disposition.
(B) The fee imposed under subparagraph (A) shall be reduced with
respect to securities in an amount equal to any fee paid to the
Commission with respect to such securities in connection with the
proposed transaction under section 77f(b) of this title, or the fee
paid under that section shall be reduced in an amount equal to the
fee paid to the Commission in connection with such transaction
under this subsection. Where two or more companies involved in an
acquisition, merger, consolidation, sale, or other disposition of
substantially all the assets of a company must file such proxy
material with the Commission, each shall pay a proportionate share
of such fee.
(2) At the time of filing such preliminary information statement
as the Commission may require by rule pursuant to subsection (c) of
this section, the issuer shall pay to the Commission the same fee
as required for preliminary proxy solicitation material under
paragraph (1) of this subsection.
(3) At the time of filing such statement as the Commission may
require by rule pursuant to subsection (d)(1) of this section, the
person making the filing shall pay to the Commission a fee at a
rate that, subject to paragraphs (5) and (6), is equal to $92 per
$1,000,000 of the aggregate amount of cash or of the value of
securities or other property proposed to be offered. The fee shall
be reduced with respect to securities in an amount equal to any fee
paid with respect to such securities in connection with the
proposed transaction under section 6(b) of the Securities Act of
1933 (15 U.S.C. 77f(b)), or the fee paid under that section shall
be reduced in an amount equal to the fee paid to the Commission in
connection with such transaction under this subsection.
(4) Offsetting collections. - Fees collected pursuant to this
subsection for any fiscal year shall be deposited and credited as
offsetting collections to the account providing appropriations to
the Commission, and, except as provided in paragraph (9), shall not
be collected for any fiscal year except to the extent provided in
advance in appropriation Acts. No fees collected pursuant to this
subsection for fiscal year 2002 or any succeeding fiscal year shall
be deposited and credited as general revenue of the Treasury.
(5) Annual adjustment. - For each of the fiscal years 2003
through 2011, the Commission shall by order adjust each of the
rates required by paragraphs (1) and (3) for such fiscal year to a
rate that is equal to the rate (expressed in dollars per million)
that is applicable under section 6(b) of the Securities Act of 1933
[15 U.S.C. 77f(b)] for such fiscal year.
(6) Final rate adjustment. - For fiscal year 2012 and all of the
succeeding fiscal years, the Commission shall by order adjust each
of the rates required by paragraphs (1) and (3) for all of such
fiscal years to a rate that is equal to the rate (expressed in
dollars per million) that is applicable under section 6(b) of the
Securities Act of 1933 [15 U.S.C. 77f(b)] for all of such fiscal
years.
(7) Pro rata application. - The rates per $1,000,000 required by
this subsection shall be applied pro rata to amounts and balances
of less than $1,000,000.
(8) Review and effective date. - In exercising its authority
under this subsection, the Commission shall not be required to
comply with the provisions of section 553 of title 5. An adjusted
rate prescribed under paragraph (5) or (6) and published under
paragraph (10) shall not be subject to judicial review. Subject to
paragraphs (4) and (9) -
(A) an adjusted rate prescribed under paragraph (5) shall take
effect on the later of -
(i) the first day of the fiscal year to which such rate
applies; or
(ii) five days after the date on which a regular
appropriation to the Commission for such fiscal year is
enacted; and
(B) an adjusted rate prescribed under paragraph (6) shall take
effect on the later of -
(i) the first day of fiscal year 2012; or
(ii) five days after the date on which a regular
appropriation to the Commission for fiscal year 2012 is
enacted.
(9) Lapse of appropriation. - If on the first day of a fiscal
year a regular appropriation to the Commission has not been
enacted, the Commission shall continue to collect fees (as
offsetting collections) under this subsection at the rate in effect
during the preceding fiscal year, until 5 days after the date such
a regular appropriation is enacted.
(10) Publication. - The rate applicable under this subsection for
each fiscal year is published pursuant to section 6(b)(10) of the
Securities Act of 1933 [15 U.S.C. 77f(b)(10)].
(11) Notwithstanding any other provision of law, the Commission
may impose fees, charges, or prices for matters not involving any
acquisition, merger, consolidation, sale, or other disposition of
assets described in this subsection, as authorized by section 9701
of title 31, or otherwise.
(h) Proxy solicitations and tender offers in connection with
limited partnership rollup transactions
(1) Proxy rules to contain special provisions
It shall be unlawful for any person to solicit any proxy,
consent, or authorization concerning a limited partnership rollup
transaction, or to make any tender offer in furtherance of a
limited partnership rollup transaction, unless such transaction
is conducted in accordance with rules prescribed by the
Commission under subsections (a) and (d) of this section as
required by this subsection. Such rules shall -
(A) permit any holder of a security that is the subject of
the proposed limited partnership rollup transaction to engage
in preliminary communications for the purpose of determining
whether to solicit proxies, consents, or authorizations in
opposition to the proposed limited partnership rollup
transaction, without regard to whether any such communication
would otherwise be considered a solicitation of proxies, and
without being required to file soliciting material with the
Commission prior to making that determination, except that -
(i) nothing in this subparagraph shall be construed to
limit the application of any provision of this chapter
prohibiting, or reasonably designed to prevent, fraudulent,
deceptive, or manipulative acts or practices under this
chapter; and
(ii) any holder of not less than 5 percent of the
outstanding securities that are the subject of the proposed
limited partnership rollup transaction who engages in the
business of buying and selling limited partnership interests
in the secondary market shall be required to disclose such
ownership interests and any potential conflicts of interests
in such preliminary communications;
(B) require the issuer to provide to holders of the
securities that are the subject of the limited partnership
rollup transaction such list of the holders of the issuer's
securities as the Commission may determine in such form and
subject to such terms and conditions as the Commission may
specify;
(C) prohibit compensating any person soliciting proxies,
consents, or authorizations directly from security holders
concerning such a limited partnership rollup transaction -
(i) on the basis of whether the solicited proxy, consent,
or authorization either approves or disapproves the proposed
limited partnership rollup transaction; or
(ii) contingent on the approval, disapproval, or completion
of the limited partnership rollup transaction;
(D) set forth disclosure requirements for soliciting material
distributed in connection with a limited partnership rollup
transaction, including requirements for clear, concise, and
comprehensible disclosure with respect to -
(i) any changes in the business plan, voting rights, form
of ownership interest, or the compensation of the general
partner in the proposed limited partnership rollup
transaction from each of the original limited partnerships;
(ii) the conflicts of interest, if any, of the general
partner;
(iii) whether it is expected that there will be a
significant difference between the exchange values of the
limited partnerships and the trading price of the securities
to be issued in the limited partnership rollup transaction;
(iv) the valuation of the limited partnerships and the
method used to determine the value of the interests of the
limited partners to be exchanged for the securities in the
limited partnership rollup transaction;
(v) the differing risks and effects of the limited
partnership rollup transaction for investors in different
limited partnerships proposed to be included, and the risks
and effects of completing the limited partnership rollup
transaction with less than all limited partnerships;
(vi) the statement by the general partner required under
subparagraph (E);
(vii) such other matters deemed necessary or appropriate by
the Commission;
(E) require a statement by the general partner as to whether
the proposed limited partnership rollup transaction is fair or
unfair to investors in each limited partnership, a discussion
of the basis for that conclusion, and an evaluation and a
description by the general partner of alternatives to the
limited partnership rollup transaction, such as liquidation;
(F) provide that, if the general partner or sponsor has
obtained any opinion (other than an opinion of counsel),
appraisal, or report that is prepared by an outside party and
that is materially related to the limited partnership rollup
transaction, such soliciting materials shall contain or be
accompanied by clear, concise, and comprehensible disclosure
with respect to -
(i) the analysis of the transaction, scope of review,
preparation of the opinion, and basis for and methods of
arriving at conclusions, and any representations and
undertakings with respect thereto;
(ii) the identity and qualifications of the person who
prepared the opinion, the method of selection of such person,
and any material past, existing, or contemplated
relationships between the person or any of its affiliates and
the general partner, sponsor, successor, or any other
affiliate;
(iii) any compensation of the preparer of such opinion,
appraisal, or report that is contingent on the transaction's
approval or completion; and
(iv) any limitations imposed by the issuer on the access
afforded to such preparer to the issuer's personnel,
premises, and relevant books and records;
(G) provide that, if the general partner or sponsor has
obtained any opinion, appraisal, or report as described in
subparagraph (F) from any person whose compensation is
contingent on the transaction's approval or completion or who
has not been given access by the issuer to its personnel and
premises and relevant books and records, the general partner or
sponsor shall state the reasons therefor;
(H) provide that, if the general partner or sponsor has not
obtained any opinion on the fairness of the proposed limited
partnership rollup transaction to investors in each of the
affected partnerships, such soliciting materials shall contain
or be accompanied by a statement of such partner's or sponsor's
reasons for concluding that such an opinion is not necessary in
order to permit the limited partners to make an informed
decision on the proposed transaction;
(I) require that the soliciting material include a clear,
concise, and comprehensible summary of the limited partnership
rollup transaction (including a summary of the matters referred
to in clauses (i) through (vii) of subparagraph (D) and a
summary of the matter referred to in subparagraphs (F), (G),
and (H)), with the risks of the limited partnership rollup
transaction set forth prominently in the fore part thereof;
(J) provide that any solicitation or offering period with
respect to any proxy solicitation, tender offer, or information
statement in a limited partnership rollup transaction shall be
for not less than the lesser of 60 calendar days or the maximum
number of days permitted under applicable State law; and
(K) contain such other provisions as the Commission
determines to be necessary or appropriate for the protection of
investors in limited partnership rollup transactions.
(2) Exemptions
The Commission may, consistent with the public interest, the
protection of investors, and the purposes of this chapter, exempt
by rule or order any security or class of securities, any
transaction or class of transactions, or any person or class of
persons, in whole or in part, conditionally or unconditionally,
from the requirements imposed pursuant to paragraph (1) or from
the definition contained in paragraph (4).
(3) Effect on Commission authority
Nothing in this subsection limits the authority of the
Commission under subsection (a) or (d) of this section or any
other provision of this chapter or precludes the Commission from
imposing, under subsection (a) or (d) of this section or any
other provision of this chapter, a remedy or procedure required
to be imposed under this subsection.
(4) "Limited partnership rollup transaction" defined
Except as provided in paragraph (5), as used in this
subsection, the term "limited partnership rollup transaction"
means a transaction involving the combination or reorganization
of one or more limited partnerships, directly or indirectly, in
which -
(A) some or all of the investors in any of such limited
partnerships will receive new securities, or securities in
another entity, that will be reported under a transaction
reporting plan declared effective before December 17, 1993, by
the Commission under section 78k-1 of this title;
(B) any of the investors' limited partnership securities are
not, as of the date of filing, reported under a transaction
reporting plan declared effective before December 17, 1993, by
the Commission under section 78k-1 of this title;
(C) investors in any of the limited partnerships involved in
the transaction are subject to a significant adverse change
with respect to voting rights, the term of existence of the
entity, management compensation, or investment objectives; and
(D) any of such investors are not provided an option to
receive or retain a security under substantially the same terms
and conditions as the original issue.
(5) Exclusions from definition
Notwithstanding paragraph (4), the term "limited partnership
rollup transaction" does not include -
(A) a transaction that involves only a limited partnership or
partnerships having an operating policy or practice of
retaining cash available for distribution and reinvesting
proceeds from the sale, financing, or refinancing of assets in
accordance with such criteria as the Commission determines
appropriate;
(B) a transaction involving only limited partnerships wherein
the interests of the limited partners are repurchased,
recalled, or exchanged in accordance with the terms of the
preexisting limited partnership agreements for securities in an
operating company specifically identified at the time of the
formation of the original limited partnership;
(C) a transaction in which the securities to be issued or
exchanged are not required to be and are not registered under
the Securities Act of 1933 [15 U.S.C. 77a et seq.];
(D) a transaction that involves only issuers that are not
required to register or report under section 78l of this title,
both before and after the transaction;
(E) a transaction, except as the Commission may otherwise
provide by rule for the protection of investors, involving the
combination or reorganization of one or more limited
partnerships in which a non-affiliated party succeeds to the
interests of a general partner or sponsor, if -
(i) such action is approved by not less than 66 2/3
percent of the outstanding units of each of the participating
limited partnerships; and
(ii) as a result of the transaction, the existing general
partners will receive only compensation to which they are
entitled as expressly provided for in the preexisting limited
partnership agreements; or
(F) a transaction, except as the Commission may otherwise
provide by rule for the protection of investors, in which the
securities offered to investors are securities of another
entity that are reported under a transaction reporting plan
declared effective before December 17, 1993, by the Commission
under section 78k-1 of this title, if -
(i) such other entity was formed, and such class of
securities was reported and regularly traded, not less than
12 months before the date on which soliciting material is
mailed to investors; and
(ii) the securities of that entity issued to investors in
the transaction do not exceed 20 percent of the total
outstanding securities of the entity, exclusive of any
securities of such class held by or for the account of the
entity or a subsidiary of the entity.
|
|